Kim Kardashian vs. Bankruptcy

Is Kim Kardashian really more important than mass municipal bankruptcy?

As the nation fawns over Kim Kardashian's latest apparel and her baby, a judge has cleared the way for Stockton to proceed with Chapter 9
bankruptcy hearings. Stockton owes nearly $1 billion to the state retirement
program. The outcome of the case could set a precedent that may
reverberate nationwide. Sadly, Americans seem more interested in Kim Kardashian than the potential of mass, nationwide bankruptcy.

STOCKTON, CA (Catholic Online) - The largest city in the nation to ever
declare bankruptcy is moving forward with plans following Monday's
ruling by a judge that said city can go ahead and declare Chapter 9. The
case will resolve who gets paid first from limited city funds -
retirees or creditors.

During heady and cash-rich days,
Stockton, along with many other major cities across the nation,
attracted a talented workforce with the promise of very generous
retirement pensions. However, those pensions have become the city's
single biggest liability. Stockton owes about $900 million to the
California Public Employees Retirement System (CalPERS).

Payments
to the system have continued, but the city owes more than it can pay.
The nearly $1 billion in pension debt is the single largest liability
the city owes and it has done much to bankrupt the coffers.

The
cash-strapped city has already cut public services including police
forces as much as they can. Police, for example, now only respond to
emergencies in progress. Crime has spiked.

The city's proposal
now involves reducing some of the current pensions without touching
those previously negotiated. However, attorneys for some creditors argue
this is unfair and that all pension plans should be cut, not just new
ones.

California law says Stockton must pay the pensions,
however bankruptcy court could allow the city to restructure the debt,
effectively getting out of having to pay some of the pensions. This may
conflict with California's state rights as outlined under the 10th
Amendment. So which is more powerful, the 10th Amendment or federal
bankruptcy law?

That question remains to be answered.

Following
Stockton, several cities have declared bankruptcy and if Stockton
emerges victorious in court, it could inspire other cities to do the
same, as a means of avoiding obligations that have become too burdensome
to keep.

At the same time, if cities cans imply write off debt
they accrued by making generous deals during good times, then there may
be little to discourage them from making more promises to the next
generation of workers -- promises they might not be able to keep.

For
now, it is impossible to predict the outcome, but the entire nation is
watching Stockton to see what will happen next. What happens to Stockton
might just happen across the nation.

Meanwhile, the rest of the country appears more interested in the supermarket magazines with their glossy photos of Kim Kardashian and Justin Bieber.

Pope Francis Prayer Intentions for July 2015
Universal: That political responsibility may be lived at all levels as a high form of charity.
Evangelization: That, amid social inequalities, Latin American Christians may bear witness to love for the poor and contribute to a more fraternal society.

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